I have hundreds of books I will never read again, and some I never read in the first place. For the ones printed on traditional paper, I can give them away or sell them. The e-books are another story. They’re “stuck” wherever they’re stored, and if there’s a way to resell them and move them to someone else’s device, it’s probably copyright infringement.
That’s the lesson of the Second Circuit’s opinion in Capitol Records, LLC. v. ReDigi (Opinion available here, PDF). This case is about a company, ReDigi, that allowed purchasers of digital music to resell that music to other purchasers. The company did it by developing a system that transferred the digital music recording from one electronic storage device to another, ultimately erasing the digital recording from the first device. Record companies sued, and the District Court and the Second Circuit agreed with them, concluding that ReDigi had violated the Copyright Act.
In an opinion filed on December 12, 2018, the Second Circuit said: “The fixing of the digital file in the ReDigi server, as well as in the new purchaser’s device, creates a new phonorecord, which is a reproduction,” violating the Copyright Act’s “grant [to] the owner of a copyright the exclusive right to control the reproduction and the distribution of the copyrighted work.” (Opinion at 11-12, 16). The Court further concluded that ReDigi’s reproduction of copyrighted works did not fall into the Fair Use exception to copyright infringement.
Realizing this case has implications for all digital goods, including books, the American Library Association (ALA) filed an amicus brief (“friend-of-the-court brief”) in support of ReDigi (available here, PDF). They argued that ReDigi’s actions fall within the Fair Use exception, saying that “a positive fair use determination in this case would encourage libraries to provide innovative services to their users… such as the Internet Archive’s Open Library (page 5).”
Disagreeing with the ALA, the Association of American Publishers filed an amicus brief in support of the record industry, arguing that a decision “in ReDigi’s favor… would be catastrophic for the entire publishing industry (page 6) (available here, PDF).”
The Court rejected ReDigi’s and the ALA’s arguments and sided with the record and publishing industry. So, that’s the status of the law right now. But what if Congress changes it?
As the Second Circuit says in its opinion:
If ReDigi and its champions have persuasive arguments in support of the change of law they advocate, it is Congress they should persuade. We reject the invitation to substitute our judgment for that of Congress (36).
What I want to discuss — as a purchaser and author of e-books — is whether Congress should amend the Copyright Act to allow the resale of digital materials, including “used” e-books.
The Association of American Publishers’ brief paints a gloomy future for the publishing industry if services like ReDigi’s transfer system ever become legal. While I’d like to say that they’re overreacting, I can’t deny that a secondary market of “used” e-books will have a huge impact on the primary market for these books. As they argue:
- “Digital copies of eBooks are perfect market substitutes for new eBooks,” unlike used paper books which disintegrate over time.
- “A secondary ‘lending’ market for eBooks, would  quickly satisfy consumer demand from a very limited number of authorized copies.” (see the example in A Second Hand Market for Digital Goods?)
Yes, a secondary market of “used” ebooks will reduce the sales of books in the primary market, ultimately reducing the money publishers and authors receive. This troubling scenario is quite different from what publishers and authors faced in Authors Guild v. HathiTrust, 755 F.3d 87 (2d Cir. 2014) and Authors Guild v. Google, 804 F.3d 202 (2d Cir. 2015). In both of these cases, the Authors Guild and its allies lost–and rightly so.
In the HathiTrust case, the Authors Guild and others challenged the use of copyrighted works in a repository that (1) allows users to see search terms in books (but not the whole books), (2) preserves copyrighted works for replacement when a member’s original copy is lost, destroyed, or stolen (and “a replacement copy is unobtainable at a ‘fair’ price elsewhere”), and (3) allows member libraries “to provide patrons with certified print disabilities access to the full text of the copyrighted works.” The repository serves a public good — including the important goal of increasing accessibility to books for people with disabilities — and did not substantially impact the primary market for the books.
Similarly, in Authors Guild v. Google, the Library Project and Google books project, which allow users to search books to find out whether “the book contains a specified word or term” and see “snippets” of the text, did not substantially impact the primary market for the books. If anything, those projects advertise those books, possibly encouraging people to buy them so they can see more than a mere “snippet.”
Unlike Google’s projects and HathiTrust, ReDigi’s system actually creates a secondary market for ebooks that competes directly with the primary market. Why would anyone buy a first-band ebook when they can just as quickly and more cheaply buy a second-hand ebook in pristine condition? The reduction in sales in the primary market could dissuade publishers from offering ebooks.
Would it also discourage authors from writing them? As an indie author, I’ve never expected to make much money from the books I publish. I write these books because it’s a fun experience and a much-needed distraction from my public policy and litigation-focused “day job.” But I realize that it’s a privilege to be able to make art for little pay, and I’m wary of any potential legislative change or future judicial announcement that reduces the income of artists.